Thursday, January 31, 2013

I'm incredibly excited to announce that last Thursday we opened our first Shoes of Prey store within David Jones, Elizabeth St. Sydney!

This has been a huge project for us, David Jones and our friends at The General Store who developed the concept and design. And the resulting store looks incredible!

Two of the major issues we face as an online retailer of custom products are:
1. Women want to see and touch our leathers, experience the quality of the product and try the shoes on for size.
2. Many potential customers struggle to make a decision on which of their many designs they should buy.
Both of these issues we can solve in our store.

To solve these two issues, we wanted to create an exciting and immersive retail experience. And in line with the "purple cow" nature of our brand, we wanted something that really stands out.

To these ends, the store can be broken into two functions.

1. Drawing people into the store. The store features a 2.4m flower sculpture made from our shoes growing out of the large round table which forms the centre piece of the store. The flowers are framed by the large back wall featuring our logo and tag line "Design your perfect shoe". The wall also features some of our shoes with tags on each of them telling you who designed the shoe and where they're from, eg. Jade, Manly or Yuka, Tokyo. At waist height along the back wall are all of our 157 leathers laid out in colour order.

2. Creating an immersive experience. Once we've drawn someone into the store we invite them to sit down at the table where the rest of the experience takes place without the customer needing to move. On the table are 6 iPads which the customer can use to design their shoes. Also on the table are boxes containing swatches of all our leathers that customers can place next to each other so they can see how the different colours and materials will go together. The stools the customers sit on are made from our shoe leathers, as is the black soft leather tabletop. ARIA winning artist Neal Sutherland composed a sound track which plays from the centre of the table, and our very own Shoes of Prey scent also emantes from the middle of the table! When the customer is ready to try some shoes on to determine their shoe size, a Shoes of Prey team member (we staff the store full time) can bring the shoes over to them and the customer can try them on while remaining seated on the stool.

This is our first store and it's a trial of offline retailing for us. The store is in the David Jones store closest to our head office so we can spend time in the store understanding and learning what does and doesn't work, with a view to rolling out more stores if the trial is successful.

It's incredibly exciting for us to partner with David Jones. David Jones is one of Australia's oldest and largest retailers opening its first store 175 years ago! We're one of Australia youngest retailers, a short 3.5 years old. David Jones have a strong fashion pedigree, their brand has a similar positioning to ours and they've devoted an entire floor of their Elizabeth St. store to women's shoes which is testament to how much they value the space we're operating in.

Donna Player and the team at David Jones have been incredible. Doing this deal and our store design broke a lot of David Jones' established rules and ways of dealing with concession holders and without this we wouldn't have been able to operate in the store. David Jones often get a bad rap for their lack of innovation, but seeing first hand their willingness to change and work with us has been an exciting experience, we honestly couldn't have picked a better partner.

I also wanted to give a huge shout out to the team from The General Store. I first met Matt Newell at the Supercheap Auto 1000 in Bathurst when I was a budding retail graduate and Matt was working for Supercheap Auto's ad agency. We hit it off and have been good friends since. Matt and his business parter Andrew Fraser have recently launched the retail agency The General Store.

6 months ago we held a 2 day brand development workshop with them which was incredible, so we engaged them to develop the concept and design for our Shoes of Prey store. In addition to facilitating the introduction to David Jones, what they came up with for the store design is nothing other than incredible. The concept of drawing people in, then creating an immersive experience and all the little details that go around this is all their work. We couldn't be happier working with them and can't recommend them to other retailers highly enough. The full team from The General Store who worked on this project: Andrew Fraser (creative partner), Matt Newell (strategy partner), Allister Jennings (interior designer), Tobhiyah Feller (theatre set designer), Daniel Stukel Beasley (architect), Neal Sutherland (musician).

And finally, a massive thank you to the people on our team who worked on this project, particularly Dave Knapp who managed the project from our side and at times moved mountains to ensure we got the project up and running. Thanks also to Maria, Lucy, Anna, Marcela, Brigette, Dione and Lydia from our retail and customer happiness teams who put in a huge effort to get the store up and running, and are helping out with working in it, as well as Jessica who has provided lots of sales training.

Thanks also to Helen for her design work, Jade and Jodie for managing the PR, Mike for getting the iPad app built so quickly and Ritwik and Dylan for ensuring the internet was working despite some early teething issues. And thanks to Yusuke, Taka and the team in Japan for their willingness to trial a simpler display in department stores in Japan over the last 18 months, which gave us the inspiration and many of the learnings we've applied to our store in David Jones. It's been a huge team effort and we're so exciting to have it launched! Now to sell some shoes...! :D

Friday, January 25, 2013

Last week I met with 5 people from Treasury and the Department of Industry and Innovation to discuss the legal issues around employee share options plans, particularly for startups.

During the meeting, I shared my thoughts as I'd outlined them in my previous blog post. Thanks so much to everyone who responded in the comments, your thoughts and ideas were really useful. The people I met with had good questions and seemed to have a good take on the issues and impact for startups of the current legislation. They were meeting with quite a few people in the space over a couple of days. They indicated that one of the challenges they face is how to make things simpler for startups, while ensuring larger companies like investment banks can't use the legislation as a way to reduce their tax obligations. (Apparently the law around options changed a few years back to prevent Macquarie Bank using the legislation to pay less tax. Startups got caught up in these changes).

We're in the process of putting together an employee share options plan for our team at Shoes of Prey and as we've progressed with this over the last few weeks I've come to the realisation that while the law around this is a long way from perfect, it's actually not that expensive for a startup to structure a good plan within the law as it stands at the moment. We're finalising our plan now, the total cost for accounting and legal fees will be $5,000, well within the budget of most startups.

I'll post full details of how we're structuring our plan in a few weeks time when it's up and running.

In the meantime, I'd love to hear from others who have set up ESOPs. Did you have a similar experience to us where, while not as simple as it could be, in practice the cost of setting this up was actually quite low? Do we actually need to be lobbying to change this legislation or are we better off focusing our energies on other, extremely important areas like education?

Thursday, January 24, 2013

We've recently had 3 new people start in our office in China. Please join me in welcoming them to the team!

Chen Xi joined Shoes of Prey us a few months ago and has been working closely with our Sydney team providing updates on our production schedule and sourcing. Chen Xi hails from Henan Province and has a Bachelor of Engineering from Zhengzhou University. Before joining Shoes of Prey, Chen Xi worked in various women's shoes trading companies as a developer, paper pattern maker and 3D scanner operator. Chen Xi is passionate about all things women's shoes and would like to open her own boutique store in the future.

Su Li Zhu has very recently joined the Shoes of Prey China team and is a local of Guangdong Province. She earned a Degree in English Education from Zhaoqing College and speaks fluent Cantonese, Mandarin and English. Su Li Zhu previously spent six years at a shoe trading company primarily working with Nike to develop baseball and soccer shoes. Whilst there, she held the positions of developer, promotions team leader and purchasing team leader. Sue was also previously a part-time English teacher to local children.

Wen Xiao Qing hails from Hunan province and has been working with women's shoes her entire working life. She majored in Business English at technical college in Hunan and speaks and writes English fluently. Prior to joining Shoes of Prey, she worked as a developer at a women's shoe trading company, liaising with foreign clients to develop new shoe prototypes. Prior to this, she was a buyer for a shoe factory where she was responsible for coordinating and executing the purchasing of materials in accordance with clients' requests. Outside of work, she is a keen cook and also enjoys riding her bike.

Tuesday, January 22, 2013

Telstra's Smarter Business Ideas website has been kind enough to nominate 22michaels as one of Australia's Top 25 Small Business Blogs. There's a great list of blogs there that are all worth checking out and subscribing to. There's a 'People's Choice Award' so feel free to vote for your favourites while you're on the site. :)

They emailed through a few questions which are going up on their site. I thought I'd share my answers here as well.

1. What is the best business advice you’ve received? Hire people smarter than you.

2. Who was it from? A whole range of business books and mentors, but I probably first read it in Good to Great by Jim Collins.

3. How did you implement it?1. We started by taking time out from the business to define the culture and values we wanted to operate by. We put together a draft of these and took them to our team of around 10 at the time and sought their feedback. Here's the first version of these slides we put together. We published these to our 22michaels.com blog. We now live and breathe these values internally and whenever we put together a job description, we now refer to these slides. Sharing with people how we work has not only attracted more people to working with Shoes of Prey it acts as a self selection process. If our culture and values are not attractive for someone they don't apply for a job with us. If someone does apply we know that they're interested in our way of working together.

2. We write detailed job descriptions that outline the day to day activities in the role, what you'll need to be achieving to be 'killing it' in the role, and what experience and traits we're looking for. Here's our most recent job description for a Customer Happiness Wonderperson.

Doing just these two key things, we now get a lot more high quality applicants for the roles we hire for. For that most recent role, a Customer Happiness Wonderperson we received 180 applications! There were so many good candidates that we ended up hiring 3 people rather than the 1 we'd originally planned for.

Thursday, January 17, 2013

It's with great pleasure that we welcome to the team Dave Paulic! Dave recently joined the team as our Executive Assistant to the Founders / Office Manager. He's responsible for keeping everything organised in the office, as well as working closely with Jodie and I and to a lesser extent Mike (who is uber organised already!) to take on and organise much of what we currently do.

Prior to joining us Dave was an Executive Assistant / Office Manager / Paralegal at a Canberra law firm specialising in family and criminal law.

Anna and Dave have known each other for a number of years and when referring Dave to us Anna explained that she and her friends' nickname for Dave while they were travelling together was 'DaveDave' as he always knew where they were going and was so organised he was like a 'TomTom' GPS device!

Dave loves travelling and skiing and has a season pass to Perisher ski resort in NSW.

Treasury and the Department of Industry and Innovation are currently undertaking targeted consultation regarding employee share scheme options including their use and impact on Australian start-ups. This issue has been raised through various consultations with industry including the Prime Minister’s Digital Economy Forum in October 2012. At the Forum, the Prime Minister committed the Government to the development of a Digital Economy White Paper (link), to examine how the Australian Government can best support the growth of the digital economy. The White Paper is expected to focus on aspects such as digital innovation and the supporting regulatory environment, including how to encourage innovation and investment in Australia’s digital economy, as well as adoption of cloud computing, ICT skills and teleworking. The outcomes of our consultations will also be considered in the context of the White Paper.

We would like to meet with you in early January to discuss the experiences of start-up companies:

in attracting and retaining skilled and experienced employees;

the benefits they offer to employees, including shares or options; and

the barriers to offering an employee share scheme, including how the current tax and other regulatory requirements may limit the ability of start-ups to offer such schemes.

I'm meeting with the department tomorrow morning. Below are my notes for the meeting. If you have anything you'd like me to add please leave them in the comments below.

Attracting people to Shoes of Prey
Attracting top talent, particularly outstanding software engineers and experienced digital marketers is hard in Australia. We invest a significant amount of our resources in building our name and reputation as being a great place to work, attracting top talent to apply for roles with us, then motivating and retaining these people once they're hired. We've had to compete with overseas companies to hire Australians, and on many occasions we've had to recruit from overseas to get the right person for the right role at Shoes of Prey. We've promised all these hires participation in an employee share plan and we're in the process of setting this up.

Aligns interests of employees with the company. Leads to greater success for the company, employees and the economy as a whole.

Helps attract top performing employees. Superstar software engineers, marketers, sales people and others are able to work in many different countries in the global economy. Strong ESOPs can help keep them at Australian companies, and attract top talent from overseas to Australia.

Allows wealth to be spread more evenly. If a company is successful, people working at the company benefit, not just the founders and investors.

ESOPs and high employee engagement have helped drive growth in the US economy in the last half century. It's estimated that 28 million US employees participate in an employee ownership plan, about 1/5 of the entire private sector. ESOP adoption rates are estimated at only 6% in Australia.

Problem with current tax policy
Current Australian tax policy treats options like compensation rather than capital gains for tax purposes. Employees therefore have to pay a significant amount of tax during the same year as the options are purchased, when, particularly at startups, there is a reasonably high probability those shares may never realise any value for the employee. There is a complicated way around this, that involves a limited recourse loan arrangement provided by the employer. We're exploring this now but it's relatively complicated and expensive to set up for a startup and could be made much simpler.

How to resolve this
The taxation treatment of ESOPs needs to change so that employees aren't taxed on their options when they're received, instead the sale of the options should be treated as a capital gain when they're sold and a cash payment is received.

Monday, January 14, 2013

For the last 3 years we've had an aversion to discounting at Shoes of Prey. We're not fans of what it does to a brand, many retailers and particularly Australian retailers have dug themselves into a hole with excessive discounting and have trained customers to only buy from them when they're on sale. We have a unique product that is great value and we want to avoid excessive discounting.

2013 is our fourth January and every year our sales drop significantly in the first few weeks of the new year. You only need to walk through a shopping centre or mall in early January to see why - every retailer is having a sale. Our customers have spent a lot of money in December, and what they have left they're spending at retailers who are running January sales.

So we're experimenting with a sale. We're still not going to do them often, we may even decide not to do it again, but until Thursday we're offering 20.13% off for 2013. It will be interesting to see how this goes!

Friday, January 11, 2013

On 19 December we held the Shoes of Prey and Sneaking Duck Australian office Christmas party! Lucy and Jodie did a fantastic job of organising the event. The dress theme was 'white' and they kept the location a surprise from everyone. We had a bus pick us up from the office at midday which took us to Watsons Bay, a stunning harbour beach with views of the city. There we had a picnic lunch, drinks and participated in plenty of beach sports games! At 5pm we headed back to the office rooftop and kicked on for the night.

Saturday, January 5, 2013

This is a late welcome as Todd has been with us for a while now (since July!), and he's even posted to the 22michaels blog a few times, but better late than never! I'm very excited to officially introduce Todd Osborne as the Shoes of Prey Product Manager! :)

Todd has been working on a number of things with us:

Working out the priorities for the website (i.e. what should we be working on to make the biggest impact)

Communicating internally with the different departments and regional offices to ensure we're all on the same page

Keeping us on track with launch dates and goals

Todd hails from the hills of sunny foggy San Francisco. He's spent the past 6 years as a project manager and consultant at a hospital finance consultancy, which naturally led him into women’s fashion! He hopes to leverage this experience, as well as his intrinsic geekiness and an intractable penchant for organisation, here at Shoes of Prey. When he's not at work or fiddling with Apple's latest iDevice, you can find him running or enjoying fine wines, food, and music.

It's really exciting to have Todd working with us and amazing having him on the team for the last 6 months!